AGRAWAL OIL MILLS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THE petitioner engaged in the manufacture of edible oil, seeks quashing of impugned notice dated February 7, 1979 (annexure "3" to the petition), purportedly given under section 4-B (6) of the U. P. Trade Tax Act (briefly, "the Act") for the assessment year 1975-76. Undisputed facts are that the petitioner was granted a recognition certificate (annexure "1" to the writ petition) to purchase raw material, i. e. , oil seed for the manufacture of oil at a concessional rate. An assessment order relating to the assessment year 1975-76 was made on March 28, 1978, without bringing khali, which is a residue of oil production, to tax. Later, impugned notice was served upon the petitioner stating that it had effected consignment sales of khali in contravention of the provisions of section 4-B (6) of the Act. THE short contention of the petitioner is that there will be violation of section 4-B (6) only when the petitioner effects sales of notified goods which is oil in its case and that there will be no violation of the said provision by making consignment sales of khali only. It is contended that khali is not covered by the expression "notified goods" occurring in sub-section (6) of section 4-B and, therefore, notice is totally illegal. THE only question for consideration in this case is whether the petitioner has violated the provisions of section 4-B (6) of the Act. Sub-section (6) of section 4-B which has been omitted with effect from May 14, 1994 at the relevant time, in so far as material, was that where a dealer, in whose favour a recognition certificate has been granted under sub-section (2), purchases any goods for use in the manufacture or packing of any notified goods without payment of tax or by paying tax at a concessional rate of less than four per cent and such notified goods are sold or disposed of by such dealer otherwise than by way of sale in the State or in the course of inter-State trade or commerce or in the course of export out of India, such dealer shall be liable to pay as penalty such amount, as the assessing authority may fix. Sub-section (6) therefore, comes into play only when a dealer purchases any goods for use in the manufacture of notified goods and such goods are sold or disposed of by such dealer otherwise than by way of sale in the State. THE contention of the petitioner is that khali which is a residuary product obtained in the process of manufacturing oil, is not covered by the notification dated May 30, 1975, as amended by notification dated November 17, 1975 and therefore, that is not covered by the expression "notified goods". THEse facts are not disputed by the Standing Counsel. We are, therefore, of the view that sub-section (6) of section 4-B cannot be said to have been violated, inasmuch as the notified goods have not been sold by the petitioner outside the State in view of sub-section (6) of section 4-B. Simply because the petitioner effected consignment sales of khali which is a residue only and not covered by the expression "notified goods", section 4-B (6) cannot be resorted to take action against the petitioner. Similar view was taken by this Court in the cases of Commissioner of Sales Tax v. Agra Food Product Pvt. Ltd. [1985] 59 STC 47 (All.); 1984 UPTC 465 and Goel Industries Corporation v. Commissioner of Sales Tax 1986 UPTC 162. We are, therefore, of the considered view that the impugned notice dated February 7, 1979, is illegal. For the reasons, the petition succeeds and is allowed and the impugned notice dated February 7, 1979 (annexure "3" to the petition) is quashed. Petition allowed. .